INDEX

Introduction................................................................................................................................. 3
Research Methodology ............................................................................................................... 4
INDUSTRY PROFILE ............................................................................................................... 6
Overview Of The Industry ........................................................................................................... 7
Market Share ............................................................................................................................... 8
COMPANY PROFILE ............................................................................................................... 9
History And Development ......................................................................................................... 10
Excel Crop Care Ltd. At Bhavnagar ............................................................................................ 11
Company Profile ........................................................................................................................ 12
Organization Chart .................................................................................................................... 14
Vision Statement ....................................................................................................................... 15
Mission ...................................................................................................................................... 15
Production ................................................................................................................................. 16
Products .................................................................................................................................... 17
Product Planning ....................................................................................................................... 18
Production Process .................................................................................................................... 19
Quality Assurance ...................................................................................................................... 19
Export Area ................................................................................................................................ 21
Time Keeping System ................................................................................................................ 22
Employee Welfare Activity ........................................................................................................ 23
FINANCE DEPARTMENT : WORKING CAPITAL MANAGEMENT ............................................... 24
Introduction............................................................................................................................... 25
Organization Structure Of Finance Department ....................................................................... 25
Financial Planning ...................................................................................................................... 26
Capitalization ............................................................................................................................. 27
Theoretical Aspects Of Working Capital Management ............................................................. 28
Type Of Working Capital ........................................................................................................... 29
Sources Of Working Capital ................................................................................................................... 31
Constituents Of Working Capital ........................................................................................................... 34
Factors Determining The Working Capital Requirements ..................................................................... 36
Need For Working Capital ...................................................................................................................... 38
Management Of Working Capital .......................................................................................................... 39

2

DATA INTERPRETATION AND ANALYSIS ............................................................................... 40
Management Of Working Capital In Excel Crop Care Ltd. ..................................................................... 41
Operating Cycle ...................................................................................................................................... 42
Time And Money Concept In Working Capital Cycle ............................................................................. 42
Operating Cycle Period .......................................................................................................................... 44
Control For A, B & C Items ..................................................................................................................... 47
Statement Showing Working Capital Requirement ............................................................................... 49
Inventory ................................................................................................................................................ 50
Swot Analysis ......................................................................................................................................... 51
Working Capital Analysis ........................................................................................................................ 52
Profitability Ratio Analysis ..................................................................................................................... 53
Working Capital Related Ratio Analysis ................................................................................................. 54
A) Liquidity Ratios: ....................................................................................................................... 54
1. Current Ratio: ........................................................................................................................ 54
2. Quick Ratio ........................................................................................................................... 56
B) Current Assets Movement Ratios .............................................................................................. 58
1. Inventory Turnover Or Stock Turnover Ratio: ....................................................................... 59
2. Debtors Turnover Ratio: ........................................................................................................ 60
3. Creditor Turnover Ratio: ....................................................................................................... 63
4. Working Capital Turnover Ratio: .......................................................................................... 65
Findings ........................................................................................................................... 66
Recommendations ........................................................................................................... 67
Conclusion ....................................................................................................................... 68
Bibliography ..................................................................................................................... 69



3
INTRODUCTION
Small businesses often need ready access to working capital to deal with unforeseen
circumstances, remain competitive, or expand infrastructure. Funds may be supplied by surplus
profits, a small business cash advance, or bank financing but one thing is certain: at times,
sufficient working capital can be absolutely essential for a small business.
Working capital management is the process of planning and controlling the level and mix
of the current assets of the firm as well as financing these assets. Specially, working capital
management requires financial managers to decide what quantities of cash, other liquid assets.
Accounts receivable, and inventories the firm will hold at any point in time. In addition,
financial managers must decide how their current assets are to be financed. Financing choices
include the mix of current as well as long-term liabilities.
This high degree of divisibility has two important implications for the management of
working capital, first, if the management to choose; working capital can be acquired piecemeal
to meet immediate needs as they arise. In the management of working capital, the firm is faced
with two key questions. First given the level of sales and the relevant cost considerations, what
are the optimal amounts of cash assets, account receivable, and inventories that a firm should
choose to maintain? Second, given these optimal amounts, what is the most economical way to
finance these working capital investments?
I have chosen this title to know that how we have to manage working capital. Excel crop
care ltd. Producing crop care product and they are importing raw material from outside, so by
choosing this title, I want to know that how to manage inventory and its cost and debtors as well
as creditors. Their product demand is more in particular season only, so in that case how to
manage working capital in organization because here the creditors are there and no debtors.

4
RESEARCH METHODOLOGY
A) OBJECTIVES:
1. To study the working capital management of excel crop care ltd.
2. To study the optimum level of current assets and current liabilities of the company.
3. To study the liquidity position through various working capital related ratios.
4. To study the working capital components such as receivables accounts, cash
management, Inventory position
5. To study the way and means of working capital finance


B) IMPORTANCE OF STUDY:
Efficient management of working capital is one of the pre-conditions for the success of
an enterprise. Adequate amount working capital is maintained smooth running of a firm and for
fulfillment of twin objective of liquidity and profitability. This study is helpful to understand the
liquid position of the EXCEL CROP CARE LTD.
C) PROBLEMS TO INVESTIGATE:
Working capital has acquired a great significant and sound position in recent year with
an objective profitability and liquidity. The success of failure of business enterprise largely
dependent upon the management of working capital higher amount of working capital will
increase the liquidity at same time will create impact on profitability.
Lower amount of working capital decrease the liquidity. But day-to-day functioning of
business will also affect. Adequate amount of working capital require for the business. Thus it is
essential to study the management of working capital in industries and association of liquidity
and profitability with reference previous year.
D) RESEARCH DESIGN:
Primary Data: Through interview
Secondary Data: 3 years annual report of EXCEL CROP CARE LTD. and web data has
been collected.
Instrument For Data Collection: Interviews, the annual report of the company, Web
data collection.

5
E) LIMITATION OF STUDY
It is limited to only this particular company
Only last three years data is used so, its limited to only particular time period
It is done according to my knowledge regarding working capital.
It is done from secondary data, there may be mistakes in secondary data
The conclusion done according to my analytical ability so, there may be mistakes


6






INDUSTRY
PROFILE


7
OVERVIEW OF THE INDUSTRY
The process of globalization of Indian chemical industry was initiated in the early 1990s. The
erstwhile Indian chemical industry suffered due to the absolute monopoly of the government of
India enterprises.
But with the opening of the Indian market to foreign institutional investors (FII) and foreign
direct investment (FDI). The monopolies of this government institution were curtailed
substantially. This gave rise to the opening up of the Indian chemical industry to host of the
untapped opportunities. With the introduction of the open market economic policy by the
government of India the process of globalization of Indian chemical industry took a steady rise.
The Department of chemicals & Agrochemicals under Government of India is the
concerned highest authority that regulates the Indian chemical Industry and the allied areas of
environmental concern. The chemical Industry of India is at par with world standard and it
shares a good portion of chemical business in world market. Asian countries, African countries
and even Arab world buys Indian chemical products.
The demand for Indian chemical products is high across the world. The reason for this
popularity is its high quality and competitive price. Indias low cost and high quality chemical
product manufacturing expertise coupled with world class. Manufacturing infrastructure is the
main leveraging factor for the rise of this industry. India offers high class chemical products at a
substantial discount than its a western counterpart while delivering the same grade of output.
VISION OF AN INDIAN CROP CARE INDUSTRY
To steer the Indian agrochemical industry towards global recognition in terms of:
Product quality
Promoting safe and judicious use of agrochemicals in Agri and Public Health fields
Responsible distribution and extension
Cost-effective, modern and safe manufacturing facilities and practice

8
MARKET SHARE

COMPANY NAME PERCENTAGE SALES
Bayer Cropscien 29.75 2,139.27
Rallis India 14.94 1,074.22
MeghmaniOrgani 12.04 865.83
Excel Crop Care 10.16 731.15
PI Industries 10.00 719.3
Insecticides In 6.64 477.9
Sabero Organics 5.74 412.72
DhanukaAgritec 5.66 407.53
Monsanto India 5.03 362.12
TOTAL 100 7,190.04





30%
15%
12%
10%
10%
6%
6%
6%
5%
Market Share
Bayer Cropscien
Rallis India
Meghmani Organi
Excel Crop Care
PI Industries
Insecticides In
Sabero Organics
Dhanuka Agritec
Monsanto India

9



COMPANY
PROFILE


10
HISTORY AND DEVELOPMENT
Excel industries ltd. has comes a long way since its origin in a kitchen laboratory in 1941
and then the company has started on 5
th
September 1960. As a private limited company and
became public limited company in 1965. The company manufactures basic industrial chemicals,
pesticides, fumigants etc.
Over the years, excel came to be known as an industry leader in the area of agro-
chemicals and agro chemicals intermediates by using its expertise in chemical technology. Excel
also expanded its chemicals manufacturing range to include water treatment chemicals and
polymer additives and few other specialty chemicals.
Excels commitment to sustainable development led us to venture into the field of
environment and bio-technology. Excel is a pioneer and technology leader is rapid conversion of
municipal solid waste to organic compost. Organization organic plant protection and soil / crop
productivity enhancers are well accepted in the marker.
In order to ensure focused attention to the expanded range of activities. The agro
business division was spun off as a separate company. Excel crop care limited in 2003. Excel
crop care was set up in 2003 and actively promotes integrated pest management (IPM) to Indian
farmers. Excel is organized into two divisions i.e.
1. chemicals
2. environment and biotech
Ever since their inception, organization has built up a solid history and reputation of
developing, Manufacturing and exporting chemicals. They have achieved over 100 product and
process break through that even now are serving the specific needs. Organization has excellent
research facilities in Mumbai and at their manufacturing locations. During the last six decades,
they have received numerous awards in recognition of our dedication and excellence in the field
of agro chemicals and others.

11
EXCEL CROP CARE LTD. AT BHAVNAGAR
Amongst all, Bhavnagar site is big and a large contributing unit, Shri C.C. Shroff starts
the Bhavnagar unit with the establishment of white phosphorus plant in the year 1969.
There after two more plants named as Butane-diol and Endisulfan (tech) was established
in 1982. A pesticide formulation unit has set-up for the manufacture of Endovel 35% EC and
Triced 20% in the year 1994 one more plant has set up for the manufacture of
chloropyriphosphate
The white phosphorous plant at present closed down due to international competition.
The turnover of industry is 60 % from above products and 25 % from phosphorous and other
from special chemicals.

12
COMPANY PROFILE
Companys Name : Excel Crop Care Ltd.
Address : 6/2Ruvapary Road,
Bhavnagar.-364005
Gujarat, India.
E-mail : eccl@excelcropcare.com
Registered Office : 184-87, swami vivekanand road ,
Jogeshwari (west)
Mumbai.400102
Locations : Bhavnagar
Ahmedabad
Secundrabad
New Delhi
Mumbai
Kolkata
Phone : (0278)-2212401
(0278)-2212402
No. of Employees : 1001 to 2500
Turnover (in Crores) : 500 to 1000 crores
Establishment : 19
th
November 1941(In Bhavnagar 1969)
Board Of Director : D. S. Shath (chairman)
K. C. Shroff (vice chairman)
A. C. Shoff (M.D)
Dipesh K. Shroff (Executive Director)
Prakash K. Shroff
P. V. S. Manyan
A. D. Mango
J. R. Naik
M. L. Shah
Mukul G. Asher

13
Vice President : V.K.Parmar
Banker : Bank of India
City bank
Syndicate bank
State bank of india
AbnAmro bank
HDFC
ICICI
UTI bank
Standard Chartered Bank
Auditors : S.V.Ghatalia&associates chartered accountants
Type of product : Agro chemical and industrial chemical.
Branch offices : New Delhi, Calcutta, Hyderabad,Bangalore,
Madurai-Patna, headband
Company logo :


14
ORGANIZATION CHART





















Vice President
General President
Senior President
Manager
Personnel Production Marketing Engineering R & D Administration
Executive
Officer
Staff
Supervisor
Workers

15
VISION STATEMENT
At excel crop care; their route to success is very clear. Lead the way in whatever you do,
but stay by the side of customer and societal obligations, produce the worlds best product range,
but make them economically and ecologically viable.
They rate their success not by the glowing numbers in our rising prosperity curve of their
customers, the farmers; they see their wealth in the radiance of their healthy farms, in the smile
of assurance that lights up their faces, in the improvement of their economic and social well-
being.
They are convinced that their future is linked with that of the land and that of the
farmers. In their success lies their victor and in their smiles, lies their very existence.

MISSION
Beyond crop protection, behind every farmer
Beliefs:-
Work is worship
Self-education is the best education
Industrys primary responsibility is to save the society.
From the west to the best
Quality is more important than quantity.
Harmony and growth go hand to hand.
Help, service and guidance even after sales.
In any successful work there is 1% inspiration and 99% hard working

16
PRODUCTION
Excel crop care ltd is producing agro chemicals as well as industrial chemicals for
agriculture use. Most agricultural chemicals are being manufactured at Bhavnagar unit. Recently
company is producing a wide range of agro chemicals and formulations products at the
manufacturing sites.









PRODUCT
1. Endosulfanchemical 8. Endosulfan 35 % E.C
2. Het diol 9. Chlorphyriphos 20 % E.C
3. Butenediol 10. Chlorphyriphos 48 % E.C
4. Hitcel 11. Profonephos 50 % E.C
5. Glycel 12. Endohyper formulation
6. Glyphosate chemical 13 Exelmero 71 %
7. Imidaclo pride chemical .14. Imidacel 17 %

17
PRODUCTS
Product portfolio
Product portfolio is the statement in which the product is listedi.e. list of some of the
product. The products of excel crop care ltd are as follows.
I ndustrial chemicals:
Phosphorous trichloride
Phosphorous elemental
Phosphorous pentasalphide
Acetyl chloride
Agriculture chemicals:
EndocelChemical (endosulfanChemical)
Endocel 35 E.C(endosulfan formulation)
Trial technical (chlorphyphos technical)
Trial 20 E.C (chlorphyphos formulation)
Celphos (aluminiumphospide)
Sulfex (wattle sulfur)
Glycel technical (glyphosate Chemical)
Glycel 41 % SL (glyphosate formulation)

18
PRODUCTPLANNING
Product is a key element in the market offering. Product is anything that can be offered to satisfy
a want or need. In absence of product there is nothing to distribute, promote or to sale. Thus
there is a need for proper planning of the product. Product planning is the process of determining
that line of product, which can secure maximum net realization from the intended markets.
Long Range Planning:
It includes planning over period of 3-5 years. The planning is done at corporate level. It
is for overall development of the organization.
Annual Operation Planning:
The annual operation planning is yearly plan set after consulting the concerned persons
from different sites. It involves marketing, production and purchase functions. It considers
Market Share
Market Demand
Market Competition
Monsoon Position
Distribution Demand

19
PRODUCTION PROCESS
Process Of Endosulfan















HCCP Plant B.D.
Reactor
Filtration
Thinly Chloride SolideIntermediates
Reactor
Flaking
Flakes
Packing

20
QUALITY ASSURANCE
The quality of the product is the essential priority of excel crop care ltd. The company
has successfully implemented KAIZEN technology of quality improvement.
Company also continues to ISO 14001: 2004 environmental management systems. The
company continues to enjoy continues reputation of quality suppliers.
Kaizen Implementation
For TQM (Total quality management) the company employed KAIZEN approach which
works very smoothly in a successful manner. The main 5s included in KAIZEN approach are
segregation, strengthen, shinning, standardization, self-discipline.
License
There are about 5 licenses given to the product out them some are listed below:
Canteen license under contract hotel and restaurant.
Licenses to import store and use spirit.
Endo tech. ISI and Endocel 35% ECISI.
Factory license
ISO: 14001 certification

21
EXPORT AREA

SAFETY
The objectives of the safety department of excel crop care ltd. are;
Zero accidents
Maintain safe working procedures.
Provide safety instruments
Good housekeeping within the factory.
Legal complaints.
The Bhavnagar plant continues to maintain the OHAS: 18000 certificate for occupational
health and safety management system from 2002. They also achieved social accountability
standard certificate from national accreditation control board for laboratory in 2007.
The government of Gujarat has recognized the Bhavnagar factory with an award for achieving 1
million hours of accident free factory operations.
AMERICA
USA, Mexico , Haiti, Argentina , Chile
EUROP
Belgium , Bulgaria , Germany , France, U.K. , Spain , Italy
Netherlands, Greece.
AFRICA
Kenya , Zimbabwe , Sudan , Egypt , Ethiopia , Tanzania , Ivory Coast ,
South Africa , Djibouti
MIDDLE EAST
Iran , Saudi Arabia , U.A.E. Oman c Cyprus, Turkey , Israel , Syria ,
Y.A.R.
ASIA SPESIFIC
Australia ,New Zealand, Thailand, Myanmar, Malaysia , Philippines ,
Bangalore, Hong Kong, Singapore, Japan, South Korea , Taiwan , Nepal

22
TIME KEEPING SYSTEM
Time is an important and valuable element factor in any organization. Excel
industry ltd is more conscious of the time keeping. For the smooth running of any organization
activity,it is necessary to have a sound of time keeping system. It helps to an employee for
calculation and determination of wages and salary.
Time keeping system follow by excel industries ltd is as follows.





Late coming workers:
10 minutes late coming is allowed for workers. They are provided 5 minutes more to
enter into premises. In terms of workers half hour wages will be cut.
Staff member and supervisors:
15 minutes late coming is allowed to them. But if staff comes after 15 minutes than
short leave will be considered and his one short leave will be used. Supervisor can use the short
leave only twice a month.
Management:
5 minutes late coming is allowed that is 8:40 a.m. more than this time if they come late.
Their half day salary will cut from their monthly salary
SHIFT TIME
A 07:00 am---to---03:00 pm
B 03:00 pm---to---11:00 pm
C (NIGHT) 11:00 pm---to---07:00 am
D (GENERAL) 08:30 am---to---05:00 pm

23
EMPLOYEE WELFARE ACTIVITY
Working of ESI Scheme
Excel crop care ltd. Follows employee state insurance (ESI) scheme. According to
employee state insurance act 1948, this scheme applicable to those companies in which there
are minimum 10 workers working with machine and electric power. This scheme covers all
those employees whose salary is less than Rs. 6500 per month. Such employees are given the
following facilities.
1. Free medical facilities to employee and his family. There are 4 hospitals of E.S.I in
Bhavnagar.
2. In case of injury or sickness 75% of their salary is given to him.
3. In case of death of employee his family members are given compensation and pension
also.
4. Maternity leave for women workers for 3 months.
For E.S.I. scheme.
1.75 % amount from employees
+ 4.75 % amount from company
=6.50 % amount given as a contribution.

Provident fund scheme
It is compulsory to apply provident fund scheme under the act of 1952. In excel crop care
ltd; Bhavnagar 12 % P.F is deducted from employees salary. A yearly report is given by the
company to regional office at Ahmadabad. company must pay the amount of P.F in bank after
15 days of payment of salary.

Excel crop care ltd; deducts P.F from the employees P.F fund from this fund 15.67% is credited
to P.F and 8.33 % is for pension fund. Employees can get fund from his P.F fund.
1 .Employees can withdraw 80 % home loan from their P.F.
2. Employees can withdraw 50 % marriage loan from their P.F


24
FINANCE
DEPARTMENT:
Working Capital
Management


25
Introduction
Finance may be defined as the part of Art and science it is the art and science of
managing money. Financial management is that managerial activity which is concerned with the
planning and controlling of the firms financial resource.
Finance and accounting as such are separate function but are sufficiently related to be
described together. Accounting covers the classification of financial transactions and
summarization into the standard financial statement.
The finance function of management will have particular responsibility
Ensuring a fair return on investment
Generating and building up surplus
Planning, directing and controlling the utilization of fund.
Excel Crop Care Ltd Bhavnagar has its accounting department and head of its is K.K Mehta

ORGANIZATION STRUCTURE OF FINANCE DEPARTMENT










General Manager
Finance Manager
Office (Auditing) Staff manager Office (Accounting)

26
FINANCIAL PLANNING
Financial planning is pre-requisite for the smooth functioning finance department and for
the purpose of growth and expansion of business activities.
There are two types of financial plan:
1. Long term Financial planning
2. Short term Financial planning
The term financial plan are formulated for the expansion of business for starting new
units for developing new products for modernization of the unit and for the purpose of sales of
fixed assets.
At excel they have planning about long term as well as short term financial planning.
Short term financial planning is for monthly planning and long term planning is for yearly
planning. Financial planning and decision making are undertaken at central level decision are
made in the contest of organization objectives.



27
CAPITALIZATION
Capitalization is defined as the sum of par value of outstanding stock and the bonds.
Capitalization word is used to refer and funded obligation, which may report wholly fictitious
value; Capitalization is the estimation of present value.
In common parlance the phase Capitalization refers to total amount of capital employed
in business depending upon the efficiency of management of utilize installed capacity a
company may be under capitalization over capitalization for fair capitalization.
A company is undercapitalized if its real value is more than book value. A company is
over capitalized value is less than book value. A company is said to be fair capitalized if its real
value is equal to book values.

Book value of shares = Capital +Reserves + Surplus
No .of shares
= 2,07,69,64,000
1, 10, 05,630
= 188.72
(www.moneycontrol.com)
Capital structure refers to the making of capitalization. In a broader sense capital structure
includes shares reserves etc and the components so the total capital the optimum capital structure
may be defined as the capital maximum value of firm.

Particulars RS. (in lacs)
Share Capital 550.28
Reserves & Surplus 17,376.19
Secured Loan 5,002.75
Unsecured Loan 9,554.82


28
THEORETICAL ASPECTS OF WORKING CAPITAL MANAGEMENT
More business fails for lack of cash than for want of profit
Efficient management of working capital is one of the pre-conditions for the success of
an enterprise. Efficient management of working capital means management of various
components of working capital in such a way that an adequate amount of working capital is
maintained for smooth running of a firm and for fulfillment of twin objectives of liquidity and
profitability.
While inadequate amount of working capital impairs the firms liquidity. Holding of
excess working capital, results in the reduction of the profitability. But the proper estimation of
working capital actually required, is a difficult task for the management because the amount of
working capital varies across firms over the periods depending upon the nature of business,
production cycle, credit policy, availability of raw material, etc.
Thus efficient management of working capital is an important indicator of sound health
of an organization which requires reduction of unnecessary blocking of capital in order to bring
down the cost of financing.
Meaning of Working Capital:
Working capital is the amount of capital that a business has available to meet the day to-
day cash requirements of its operations, or more specially, for financing the conversion of raw
material into finished goods, which the company sells for payment. Funds are also needed for
short-term purposes for the purpose of raw materials, payment of wages and other day-to-day
expenses, etc. These funds are known as working capital.
In simple words, working capital refers to that part of the firms capital, which is required
for financing short-term or current assets such as cash, marketable securities, debtors and
inventories.
Working capital is a valuation metric that is calculated as current assets minus current
liabilities. Working capital is also known as operating capital.

29
TYPE OF WORKING CAPITAL


On the Basis of Concept:
1. Gross Working Capital:
The gross working capital refers to the firms investment in all the assets taken together.
The total of investment in all the individual current assets is the gross working capital.
For example: If a firm has a cash balance of Rs. 50,000 ,debtors of Rs.70,000 and inventory of
raw material and finished goods has been assessed at Rs.1,00,000,then the gross working capital
of the firm is Rs.2,20,000 (i.e. ,Rs50,000+Rs.70,000+Rs.1,00,000).
2. Net working capital:
The term net working capital may be defined as the excess of total current assets over
total current liabilities. Current liabilities refer to those liabilities which are payable within a
period of 1 year. The net working capital may either be positive or negative. If the total current
assets are more than total current liabilities, then the difference is known as positive net working
capital, otherwise the difference is known as negative net working capital. The net working
capital measures the firms liquidity. The greater the margin, the better will be the liquidity of
the firm.
Net Working Capital= Total Current Assets Total Current Liabilities
Working Capital
Basis of Concept
Gross Working
Capital
Net Working
Capital
Basis of Time
Permanent OR
Fixed Working
Capital
Temporary OR
Variable Working
Capital

30
A financial manager must consider both (gross and net working capital) because they
provide different interpretation. The gross working capital denotes the total working capital or
the total investment in current assets. This will help avoiding 1.the unnecessarily stoppage of
work or chance of liquidation due to insufficient working capital, and 2.effects on profitability
(over flowing working capital implies cost).The gross working capital also gives an idea of total
funds required for maintaining current assets.
On the other hand, net working capital refers to the amount of funds that must
beinvested by firm, more or less, regularly in current assets. The net working capital also
denotes the net liquidity being maintained by the firm.
On the Basis of Time
1. Permanent /fixed working capital:
Permanent working capital may be defined as the minimum level of current assets, which
is required by a firm to carry on its business operations. Every firm has to maintain a minimum
level of raw materials, work-in-progress, finished goods and cash balances.
For example-extra inventory of finished goods will have to be maintained to support the peak
periods of sale. Permanent working capital is permanently needed for the business and therefore,
it should be financed out of long term funds.
2. Fluctuating /variable working capital:
It is the extra working capital needed to support the changing production and sales
activities of the firm. The amount of temporary working capital keeps on fluctuating on time to
time on the basis of business activity. Both kind of working capital permanent and fluctuating
(temporary) are necessary to facilitate production and sales through the operating cycle. The
amount over and above permanent working capital is temporarily variable or fluctuating.

31
SOURCES OF WORKING CAPITAL
The company can choose to finance its current assets by:
A. Long term sources
B. Short term sources
C. Combination of them.
A. Long Term Sources Of Permanent Working Capitalinclude equity and preference shares,
retained earnings, debentures and other long term debts from public deposits and financial
institution. The long term working capital needs should meet through long term means of
financing. Financing through long term means provides stability, reduces risk or payment and
increases liquidity of the business concern. Various types of long term sources of working
capital are summarized as follow:
1. I ssue of shares:
It is the primary and most important sources of regular or permanent working capital.
Issuing equity shares as it does not create and burden on the income of the concern. Nor the
concern is obliged to refund capital should preferably raise permanent working capital.
2. Retained earnings:
Retain earning accumulated profits are a permanent sources of regular working capital. It
is regular and cheapest. It creates not charge on future profits of the enterprises.
3. I ssue of debentures:
It creates a fixed charge on future earnings of the company. Company is obliged to
pay interest. Management should make wise choice in procuring funds by issue of debentures.
4. Long term debt:
Company can raise fund from accepting public deposits, debts from financial institution
like banks, corporations etc. the cost is higher than the other financial tools.
5. Other sources:
Sale of idle fixed assets, securities received from employees and customers are examples of
other sources of finance.


32
B. Short Term Sources Of Temporary Working Capital
Temporary working capital is required to meet the day to day business expenditures.
The variable working capital would finance from short term sources of funds. And only the
period needed. It has the benefits of, low cost and establishes closer relationships with banker.
Some sources of temporary working capital are given below:
1. Commercial bank:
A commercial bank constitutes significant sources for short term or temporary working
capital. This will be in the form of short term loans, cash credit, and overdraft and though
discounting the bills of exchanges.
2. Public deposits:
Most of the companies in recent years depend on this source to meet their short term
working capital requirements ranging from six month to three years.
3. Various credits:
Trade credit, business credit papers and customer credit are other sources of short term
working capital. Credit from suppliers, advances from customers, bills of exchanges, etc helps to
raise temporary working capital.
4. Reserves and other funds:
Various funds of the company like depreciation fund. Provision for tax and other
provisions kept with the company can be used as temporary working capital.The company
should meet its working capital needs through both long term and short term funds. It will be
appropriate to meet at least 2/3 of the permanent working capital equipments form long term
sources, whereas the variables working capital should be financed from short term sources. The
working capital financing mix should be designed in such a way that the overall cost of working
capital is the lowest, and the funds are available on time and for the period they are really
required

33
C. Sources Of Additional Working Capital
1. Existing cash reserves
2. Profits (when you secure it as cash)
3. Payables (credit from suppliers)
4. New equity or loans from shareholder
5. Bank overdrafts line of credit
6. Long term loans
If we have insufficient working capital and try to increase sales, we can easily over stretch the
financial resources of the business. This is called overtrading. Early warning signs include:
1. Pressure on existing cash
2. Exceptional cash generating activities. Offering high discounts for clear cash payment
3. Bank overdraft exceeds authorized limit
4. Seeking greater overdrafts or lines of credit
5. Part paying suppliers or there creditor.
6. Management pre occupation with surviving rather than managing.

34
CONSTITUENTS OF WORKING CAPITAL
CURRENT ASSETS:
The assets which are in the ordinary course of business could be converted into cash
within an accounting period. The following are listed by the EXCEL CROP CARE LTD as
current assets
1) I nventories
a) Raw material and packaging material
b) Work in progress
c) Finish goods
2) Sundry debtors:
a) Debts outstanding for a period exceeding six months
b) Other debts
3) Cash and bank balances:
Expected month end bank balances are supposed to be budgeted. This will be calculated
as Customer collections plus Remittance from India less Repatriation to India. We have bank
account in scheduled banks.
4) Loan and advances
a) Sundry deposits.
b) Balances with custom and excise authority
c) Advance payment of taxes
d) Prepaid expenses like payment of insurance premium
CURRENT LIABILITY:
The liabilities which are to be paid in the ordinary course of business within an
accounting year out of the current assets or earnings of the business concern are current
liabilities. The following items are included under this category for EXCEL CROP CARE LTD
1) Current liability
a) Sundry creditor
b) Advance from customers


35
2) Short term credit:
a) Short term loans
b) Cash credit from banks
c) Other short term payables.
3) Provisions:
a) Provision for Gratuity
b) Provision for compensated absences



36
FACTORS DETERMINING THE WORKING CAPITAL
REQUIREMENTS
1. Nature Of Business: The requirements of working is very limited in public utility
undertakings such as electricity, water supply and railways because they offer cash sale only
and supply services not products, and no funds are tied up in inventories and receivables. On
the other hand the trading and financial firms requires less investment in fixed assets but
have to invest large amt. of working capital along with fixed investments.
2. Size of the Business: Greater the size of the business, greater is the requirement of working
capital. Bundy India has more product line so required more capital.
3. Production Policy: If the policy is to keep production steady by accumulating inventories it
will require higher working capital. Bundy India ltd. Production policy is based on customer
requirement and specification. So we store raw material and common spare parts which use
by all automobiles company.
4. Length of Production Cycle: The longer the manufacturing time the raw material and other
supplies have to be carried for a longer in the process with progressive increment of labor
and service costs before the final product is obtained. So working capital is directly
proportional to the length of the manufacturing process.
5. Working Capital Cycle: The speed with which the working cycle completes one cycle
determines the requirements of working capital. Longer the cycle larger is the requirement of
working capital.
6. Rate of Stock Turnover: There is an inverse co-relationship between the question of
working capital and the velocity or speed with which the sales are affected. A firm having a
high rate of stock turnover will needs lower amt. of working capital as compared to a firm
having a low rate of turnover.
7. Credit Policy: A concern that purchases its requirements on credit and sales its product /
services on cash requires lesser amt. of working capital and vice-versa.


37
8. Business Cycle: In period of boom, when the business is prosperous, there is need for larger
amt. of working capital due to rise in sales, rise in prices, optimistic expansion of business,
etc. On the contrary in time of depression, the business contracts, sales decline, difficulties
are faced in collection from debtor and the firm may have a large amt. of working capital.
9. Rate of Growth Of Business: In faster growing concern, we shall require large amt. of
working capital.
10. Earning Capacity: Some firms have more earning capacity than other due to quality of their
products, monopoly conditions, etc. Such firms may generate cash profits from operations
and contribute to their working capital. The dividend policy also affects the requirement of
working capital. A firm which is maintaining a steady high rate of cash dividend irrespective
of its profits needs working capital than the firm that retains larger part of its profits and does
not pay so high rate of cash dividend.
11. Price Level Changes: Changes in the price level also affect the working capital
requirements. Generally rise in prices leads to increase in working capital.
12. Others Factors:
a) Operating efficiency.
b) Management ability.
c) Irregularities of supply.
d) Import policy.
e) Asset structure.
f) Importance of labor.
g) Banking facilities, etc

38
NEED FOR WORKING CAPITAL
The basic objective of financial management is to maximize shareholders wealth. For
this it is necessary to generate sufficient profits. The extent to it, which the profit can be earned,
largely depends on the magnitude of sales. However sales do not convert into cash instantly.
There is invariable the time gap between the sales of goods and receipts of cash. There is,
therefore, a need for working capital in the form of Current Assets to deal with the problem
arising. Out of the lack of immediate realization of cash again goods sold. Therefore, sufficient
working capital is necessary to sustain sales activity.
Working capital is needed for the following purpose:
1. For the purchase of raw material, components and spares.
2. To incur day to day expenses and overhead costs such as fuel, power and office
expenses, etc.
3. To meet selling costs as packing, advertisement etc.
4. To provide credit facilities to the customers.
5. To maintain the inventories of raw material, work in progress, stores and spare and
finished goods.
6. To pay wages and salaries.

39
MANAGEMENT OF WORKING CAPITAL
Management of working capital is concerned with the problem that arises in attempting
to manage the current assets, current liabilities. The basic goal of working capital management is
to manage the current assets and current liabilities of a firm in such a way that a satisfactory
level of working capital is maintained, i.e. it is neither adequate nor excessive as both the
situations are bad for any firm. There should be no shortage of funds and also no working capital
should be ideal. WORKING CAPITAL MANAGEMENT POLICES of a firm has a great on its
probability, liquidity and structural health of the organization. So working capital management
is three dimensional in nature as
It concerned with the formulation of policies with regard to profitability, liquidity and
risk.
It is concerned with the decision about the composition and level of current assets.
It is concerned with the decision about the composition and level of current liabilities.

Objectives of Working Capital Management:
1. Deciding Optimum Level of Investment in various WC Assets
2. Decide Optimal Mix of Short Term and Long Term Capital
3. Decide Appropriate means of Short Term Financing


40





DATA
INTERPRETATION
AND ANALYSIS


41
MANAGEMENT OF WORKING CAPITAL IN EXCEL CROP CARE
LTD.
Working capital may be defined as the capital invested in the working assets like stocks
of raw materials, semi finished goods, debtors etc.
1. I nventory Management:
Excel crop care ltd has techniques for maintaining inventory at proper level. the
techniques adopted by excel crop care ltd are as under;
Economic Order Quantity. ABC analysis
Both techniques are used in excel crop care ltd. so they never face any crises of inventory.
2. Management Of Receivable:
Excel crop care ltd. is investing consideration proportion of working capital in trade
creditor book debt. So it should be managed well. Company has fixed as 30 % of working
capital in book debt. Excel crop care ltd. has adopted selective credit policy to every customer
but only that financial position is good and payment 3 months credit facility to its customer.
Excel crop care ltd has developed such optimum credit policy through its liquidity position is
very good and so. It is investing more aims in book and attracting customers.
3. Cash And Bank Management:
Excel crop care ltd. of each branch prepare budget twice in a month and money addition
cash are budget for shorts time and long period are also prepared to make cash planning more
effective. In every 15 days they prepare summery of cash inflow and outflow and find out
surplus or deficit and there after it is sent to head office. If there is and deficit than head office
provides cash. (Rs. In Lacs)
Particulars 2010-11 2009-10 2008-09
Current assets
Inventories 13,954.62 14,298.27 13,000.14
Sundry debtors 14,984.10 16,474.49 13,177.71
Cash & bank balance 850.10 1,093.85 1,215.32
Other current assets 1,263.73 589.13 800.06
Loan & advances 3,567.53 4,122.67 3,871.73
Less: Current liabilities & provision
Liabilities 11,766.77 13,112.41 10,825.49
Provisions 1,944.07 1,928.62 1,696.08
Net current assets 20,909.24 21,537.38 19,543.39

42
Raw
Materials
Work-in-
Progress
Finished
Goods
Sales
Account
Receivables
Cash
OPERATING CYCLE
The working capital requirement of a firm depends, to a great extent upon the operating
cycle of the firm. The operating cycle may be defined as the time duration starting from the
procurement of goods or raw material and ending with the sales of realization. The length and
nature of the operating cycle may differ from one firm to another depending upon the size and
nature of the firm. In a trading concern, there is a series of activities starting from procurement
of goods (saleable goods) and ending with the realization of sales revenue. Similarly in case of
manufacturing concern, this series starts from the procurement of raw materials and ending with
the sales realization of finished goods. In both the cases, however, there is a time gap between
the happening of the first event and the happening of the last event. This time gap is called the
operating cycle. Thus, the operating cycle of a firm consists of the time required for the
completion of the chronological sequences of some or all of the following:
1. Procurement of raw material and services.
2. Conversion of raw material into work-in-progress.
3. Conversion of work-in-progress into finished goods.
4. Sale of finished goods (cash or credit)
5. Conversion of receivable into cash.

43
TIME AND MONEY CONCEPT IN WORKING CAPITAL CYCLE
Each component of working capital (namely inventory, receivables and payables) has
two dimensions .TIME and MONEY, when it comes to managing working capital.
Time is Money
If we can get money to move faster around the cycle (e.g. collect money due from
debtors more quickly) or reduce the amount of money tied up (e.g. reduce inventory levels
relative to sales), the business will generate more cash or it will need to borrow less money to
fund working capital. As a consequence, we can reduce the cost of bank interest or will have
additional free money available to support additional sales growth or investment. Similarly, if
we can negotiate improved terms with suppliers,
E.g. get longer credit or an increased credit limit; we effectively create free finance to help
future sales.
IF WE THEN
Collect receivables (debtors) faster We release cash from cycle
Collect receivables(debtors) faster Our receivables soak up cash
Get better credit(in terms of duration or
amount from suppliers)
We increase our cash resources
Shift inventory(stocks)faster We free up cash
Move inventory(stocks) slower We consume more cash


44
OPERATING CYCLE PERIOD
The length or time duration of the operating cycle of any firm can be defined as the sum of
its inventory conversion period and the receivable conversion period.
1. I nventory conversion period:
It is the time required for the conversion of raw material into finished goods sales. In a
manufacturing firm the inventory conversion period is consisting of raw material conversion
period (RMCP), work-in-progress conversion period (WPCP) and finished goods conversion
period (FGCP).
Raw material conversion period refers to the period for which the raw material is
generally kept in stores before it is issued to the production department.
The work-in-progress conversion period (WPCP) refers to the period for which the
raw material remains in the production process before it is taken out as finished units.
The finished goods conversion period refers to the period for which finished units
remains in stores before being sold a customer.
2. Receivable conversion period (RCP):
It is the time required to convert the credit sales into cash realization. It refers to the
period between the occurrence of credit sales and collection from debtors. The total of Inventory
conversion period (ICP) and Receivable conversion period (RCP) is also known as total
operating cycle period (TOCP).the firm might be getting some credit facilities from supplier of
raw material, wages earners etc. This period for which the payment to these parties are deferred
or delayed is known as deferred period (DP).the net operating cycle (NOC) of the firm is arrived
at by deducting the DP from TOCP.
NOC = TOCP-DP
= ICP+RCP-DP


45
The operating cycle concept indicates a companys true liquidity. By tracking the
historical record of the operating cycle of a company and comparing it to its peer groups in the
same industry, it gives investors investment quality of a company.
A short company operating cycle is preferable since a company realizes its profits
quickly and allows a company to quickly acquire cash that can be used for reinvestment. A long
business operating cycle means it takes longer time for a company to turn purchases into cash
through sales. In general, the shorter the cycle, the better a company is since less time capital is
tied up in the business process.

ABC ANALYSIS
Different types of analysis each having its own specific advantages and purposes, help in
bringing a practical solution to the control of Inventory .The most important of all such analysis
is ABC analysis. This analysis is based on the principle of VITAL FEW TRIVIAL MANY
and a higher degree of attention is focused on VITAL FEW, which affect the result
significantly.
An effective inventory control system should classify inventories according to value so
That the most valuable items may be paid greater and due attention regarding their safety and
supply items. Both purchased and manufactured depending upon their importance and subject
each class and group of item to control commensurate with their importance. This is the
principle of Control by Importance and Exception (C.I.E.) of selective control as applied to
inventories and the technique of grouping is termed as ABC. Analysis or classification which is
said Always Better Control. As the items are classified on the basis of importance of their
relative value, this approach is also known as proportional value analysis.
Procedure For Implementing the ABC Technique is as Follows:
i. Classify the items of inventories.
ii. Determine the expected used in units over a given period of time.
iii. Determin3e the total cost of each item by multiplying the expected units by its unit price.
iv. Rank the items in accordance with total cost, giving first rank to the item with highest
total cost and so on.

46
v. Calculate percentage of number of unit of each item to total units of all items and the
percentage of total cost of each item to total cost of all items
vi. Combine items on the basis of their relative value to form three categories A, B, and C

Class Percentage of Item Percentage of Cost
A 8% 75%
B 25% 20%
C 67% 5%

The above mentioned example is clearly explained by the graph.
From the graphical analysis: it may be found that about 8% of items cost more than 75%
of the cost on inventory. This is grouped as an item which from the most important items the
control point of view. B items forming 25% of total items constitute 20% of the total on
inventory. These are of secondary importance and lie in between A and C items which are
the numerous inexpensive items, i.e. about 75% of the items contributing to only 5% of the total
cost of material.



0%
10%
20%
30%
40%
50%
60%
70%
80%
A B C
ABC Evaluation
Percentage of Item Percentage of Cost

47
CONTROL FOR A, B& C ITEMS
Now we discuss the purchasing and stocking policies recommended for the different
classes of item A, B, & C. all these emanate from two basic requirements viz., (1) to keep the
capital tied up in the inventories as low as is practicable, and (2) to make sure that the materials
would be available when required for consumption.
I. Policies for A items ( about 8% items costing 75% in value )
1. Since these items account for over 75% percent of the value, they should be ordered
more frequently to reduce the capital locked up at a time in inventories
2. These would be many items for which the consumption varies considerably from time to
time during a year. For such items the expected future consumption should be estimated
in advance and they should then be procured on a planned basis, so that only the required
quantities arrive a little before they are required for consumption. Of course, a small
extra stock (buffer) would be carried throughout to meet any eventualities. It may be
pointed out here that the advance estimation of future consumption can be made with the
help of periodic production schedules and master schedules. In the absence of proper
production schedule there is not reliable way of estimating what quantities would be
rather difficult.
3. Annul or 6-monthly contracts with schedule deliveries or deliveries within a specified
period of order are welcome for a items.
4. Develop and revise more often ordering quantities, reorder points and safety stock for
items not covered by long term contracts mentioned in(3).
5. Since these items are to be stocked as less as possible, purchasing department should
make maximum efforts to expedite the delivery of these items.
6. As for as possible. Two or more suppliers should be sought for each item so that the
dependency on one supplier is an avoided. Due to strike, fire, accidents,. Or any other
eventualities if one supplier fails to supply, the other suppliers fan be approached.
7. Purchase of items should be looked into by the top execution in the purchasing
department to ensure prompt service from suppliers.
8. Stock and issue record should be meticulously maintained in the inventory control
department or in the stores as the case may be to be able to get the up-to-date position of
stocks at any times.

48
Policies for B items (above 25% of items having 20% value)
1. The policies for B items in general are intermediate between those for A and C items.
2. Order quantities, reorder points and safety stock should be fixed for B items and barring
exception revisions once a year is adequate.
3. Annual or half yearly contracts with scheduled deliveries can be used to an advance for
items.
4. Stock and issue records are necessarily to be maintained.
5. Should be ordered less frequently than an item about 3 to 6 orders per year is the range
of frequency.
II. Policies for C items (about 67% items claiming 5% value)
1. Since the items are too many and the value is less the policies are to be aimed at reducing
the ordering and stock keeping work to an extent possible and ensuring the availability at
all times by stoking liberal quantities.
2. Liberal quantities can be kept in stock since in case of C item it does not involve much
capital tie-up.
3. Annual or 6 monthly orders, should be pleaded to reduce paper work in the purchasing
department and also to take advantage of quantity discounts for bulk purchase
4. Item should be grouped like all electrical, all hardware, all paint etc. and one group of
items should be ordered all at once preferably from one or two vendors. This saves
ordering work and also transportation costs. In additions because of the inclusion of
several items.
5. Authority for the purchase of C items could be delegated to the junior executives in the
purchasing department or even to the store keeper so as Not to bother the personnel at
higher levels with work on these low value sundry items.
6. Stock and issue records can be minimized to the extent the rules of the organization
allow. In some companies for most of the C items only record of receipts is kept. In
other one consolidated issue entry month for an item is recorded. However, in quite a
few cases on records are maintained at all for C items barring some pilfer able and short
life items.


49
STATEMENT SHOWING WORKING CAPITAL REQUIREMENT
(Rs. In Crore)
PARTICULAR
YEAR
2008-09 2009-10 2010-11
Inventories 130 142.98 139.55
Sundry Debtors 131.78 164.74 149.84
Cash and Bank Balance 11.94 10.93 8.50
Other Current Assets 8.00 5.89 12.64
Loans and Advances 48.91 50.16 35.68
Total CA, Loans & Advances 322.84 368.82 346.21

Current Liabilities 126.4 147.93 117.67
Provisions 14.78 19.29 19.44
Total CL & Provisions 141.18 167.22 137.11

WC REQUIREMENT 181.66 201.6 209.1

Interpretation:
Working capital is the funding that a company needs to support its accounts
receivable and inventory, and is offset by the amount of funding it obtains from its suppliers
through accounts payable.
Working capital can have a much greater impact on a companys cash flows than the
results of its operations. One of the best ways to positively impact the amount of cash flow that a
company spins off is to take tight control of its working capital and eliminate much of the
investment in this area.
After analysis the 3 year data we can conclude that the Working Capital requirement is
increasing year by year. They are looking increasing pattern in working capital.
The company is managing working capital very precisely as we know that EXCEL
CROP CARE LTD. is high working capital oriented organization. The sale is increasing year by
year which results into increase in working capital requirement EXCEL is getting new order at
regular interval as it gives importance to quality. In India, only two companies are making
ENDOSALFAN product one is EXCEL CROP CARE LTD. and other one is BHARAT
PALVENISED. So, there is more chances of getting new order and because of this requirement
of working capital increases every year.

50
INVENTORY
(Rs in Lacs)
PARTICULARS 2010-11 2009-10 2008-09
Stock-I n-Trade:
Raw Materials 5132.96 3803.15 4314.53
Semi-Finished Goods 1220.66 1598.81 1466.83
Finished Goods 6943.54 6989.98 6112.30
Traded Products 1034.63 1378.60 691.49
Stock-in-Transits 629.73 273.31 997.45
Stores, Spares And Containers 624.83 527.73 414.99
TOTAL 15586.35 14298.27 13000.14

Interpretation
From the above data of EXCEL CROP CARE LTD. there is more blockage of working
capital into finished goods as well as in raw material. They importing certain type of raw
material from outside of India and to reduce cost company purchase in bulk and because of this
reason there is high blockage of fund in raw material.
In finish goods, its a seasonal product and as it required in particular season (in sep-oct.)
there is high level of finish goods stock to fulfilling demand in particular season and because of
this there is high blockage of fund in finished product.


51
SWOT ANALYSIS
Strength:
Company has a good reach in markets supported with an efficient and effective distribution
network
Company offers extensive solutions to farmers ranging from soil enrichment products, crop
protection in the form of pesticides, fungicides and weedicides that help the farmers curtail crop
loss throughout the crop cycle and with provisions for post harvest treatment

Weakness:
Company is having 10% market share in crop care industry
Company is having only few locations in India
Excel crop care is not that much famous as compared to Byre CropScience, Rillas India and
others.

Opportunity:
Agricultural production is not growing in response to the food demand. Currently average crop
yields in India are muchlower than global benchmarks. India has the resources necessary to meet
all its increasing needs, while keeping a surplus of farm produce, if the arable landscape is
cultivated effectively. There is a need for a holistic friend-of-the-farmer approach, offering
locally relevant farming solutions.
Widening coverage of existing products of subsidiary company

Threats:
Registration and regulatory clearances for products require detailed processing which spans
across years. This has impacted the introduction of new products or opening of new markets.
The have to maintain a level safety and security in the manufacturing site as it is a chemical
company, so government rules and regulations are imposed on the firm regarding this matter.

52
WORKING CAPITAL ANALYSIS
As we know working capital is the life blood and the center of a business. Adequate
amount of working capital is very much essential for the smooth running of the business. And
the most important part is the efficient management of working capital in right time.
The liquidity position of the firm is totally effected by the management of working
capital. So, a study of changes in the uses and sources of working capital is necessary to evaluate
the efficiency with which the working capital is employed in a business. This involves the need
of working capital analysis.
The analysis of working capital can be conducted through a number of devices like
Profitability ratio analysis, Working Capital Related Ratio Analysis.

53
5.35
5.90
5.83
5
5.1
5.2
5.3
5.4
5.5
5.6
5.7
5.8
5.9
6
2008-09 2009-10 2010-11
P
e
r
c
e
n
t
a
g
e

(
%
)

Year
Net Profit Ratio
PROFITABILITY RATIO ANALYSIS
Net Profit Ratio:
Net profit ratio indicates the proportion of net profit amount in relation to total net sales amount.
The equation of the Net profit is as follow:

Net Profit
Net Profit Ratio = 100
Sales

Year Profit Sales Ratio (NP/Sales) %
2008-09 27.80 519.83 5.35
2009-10 37.43 634.41 5.90
2010-11 43.69 749.02 5.83









Interpretation:
This ratio indicates that proportion of net profit in relation to sales amount. Here the net profit
ratio is showing a volatile balance in nature as it increase in 2009-10 by 0.55% and then
decrease in 2010-11 by 0.7%
This is occurred because the increment proportion of sales is not more than increment proportion
of net profit.

54
WORKING CAPITAL RELATED RATIO ANALYSIS
The short term creditors of a company such as suppliers of goods of credit and
commercial banks short-term loans are primarily interested to know the ability of a firm to meet
its obligations in time. The short term obligations of a firm can be met in time only when it is
having sufficient liquid assets. So to with the confidence of investors, creditors, the smooth
functioning of the firm and the efficient use of fixed assets the liquid position of the firm must
be strong. But a very high degree of liquidity of the firm being tied up in current assets.
Therefore, it is important proper balance in regard to the liquidity of the firm. Two types of
ratios can be calculated for measuring short-term financial position or short-term solvency
position of the firm.
A) LIQUIDITY RATIOS:
Liquidity refers to the ability of a firm to meet its current obligations as and when these
become due. The short-term obligations are met by realizing amounts from current, floating or
circulating assts. The current assets should either be liquid or near about liquidity. These should
be convertible in cash for paying obligations of short-term nature. The sufficiency or
insufficiency of current assets should be assessed by comparing them with short-term liabilities.
If current assets can pay off the current liabilities then the liquidity position is satisfactory. On
the other hand, if the current liabilities cannot be met out of the current assets then the liquidity
position is bad. To measure the liquidity of a firm, the following ratios can be calculated:
1. CURRENT RATIO
2. QUICK RATIO
1. CURRENT RATI O:
Current Ratio, also known as working capital ratio is a measure of general liquidity and
its most widely used to make the analysis of short-term financial position or liquidity of a firm.
It is defined as the relation between current assets and current liabilities. Thus,
CURRENT RATIO = Current Assets
Current Liabilities

55
The two components of this ratio are:
1) CURRENT ASSETS
2) CURRENT LIABILITIES
Current assets include cash, marketable securities, bill receivables, sundry debtors,
inventories and work-in-progresses. Current liabilities include outstanding expenses, bill
payable, dividend payable etc.
A relatively high current ratio is an indication that the firm is liquid and has the ability to
pay its current obligations in time. On the hand a low current ratio represents that the liquidity
position of the firm is not good and the firm shall not be able to pay its current liabilities in time.
A ratio equal or near to the rule of thumb of 2:1 i.e. current assets double the current liabilities is
considered to be satisfactory.
PARTICULAR
YEAR
2008-09 2009-10 2010-11
Total Current Assets 273.72 318.65 346.20
Total Current Liabilities 126.4 147.93 137.11
CURRENT RATIO 2.17 :1 2.15:1 2.53:1


2.17
2.15
2.53
1.9
2
2.1
2.2
2.3
2.4
2.5
2.6
2008-09 2009-10 2010-11
R
a
t
i
o

Year
CURRENT RATIO

56
Interpretation:
Acceptable current ratio values vary from industry to industry. Generally, a current ratio
of 2:1 is considered to be acceptable. The higher the current ratio is, the more capable the
company is to pay its obligations. Current ratio is also affected by seasonality.
If current ratio is below 1 (current liabilities exceed current assets), then the company
may have problems paying its bills on time. However, low values do not indicate a critical
problem but should concern the management. Current ratio gives an idea of company's operating
efficiency. A high ratio indicates "safe" liquidity, but also it can be a signal that the company has
problems getting paid on its receivable or have long inventory turnover, both symptoms that the
company may not be efficiently using its current assets.
From the above chart of current ratio of EXCEL CROP CARE LTD. nearer to 2:1 which
is shows that the company has good liquidity position. Since last two year companys liquidity
position is increasing which good signal for company.

2. QUI CK RATI O
Quick ratio is a more rigorous test of liquidity than current ratio. Quick ratio may be
defined as the relationship between quick/liquid assets and current or liquid liabilities. An asset
is said to be liquid if it can be converted into cash with a short period without loss of value. It
measures the firms capacity to pay off current obligations immediately.
QUICK RATIO = Quick Assets
Current Liabilities
Where Quick Assets are:
All current assets (Except Inventories)
A high ratio is an indication that the firm is liquid and has the ability to meet its current
liabilities in time and on the other hand a low quick ratio represents that the firms liquidity
position is not good.

57
1.14
1.19
1.25
1.08
1.1
1.12
1.14
1.16
1.18
1.2
1.22
1.24
1.26
1.28
2008-09 2009-10 2010-11
R
a
t
i
o

Year
QUICK RATIO
As a rule of thumb ratio of 1:1 is considered satisfactory. It is generally thought that if
quick assets are equal to the current liabilities then the concern may be able to meet its short-
term obligations. However, a firm having high quick ratio may not have a satisfactory liquidity
position if it has slow paying debtors. On the other hand, a firm having a low liquidity position if
it has fast moving inventories.
CALCULATION OF QUICK RATIO
PARTICULAR
YEAR
2008-09 2009-10 2010-11
QUICK ASSETS 143.72 175.67 171.97
CURRENT LIABILITIES 126.4 147.93 137.11
QUICK RATIO 1.14 1.19 1.25




58
Interpretation:
Quick ratio specifies whether the assets that can be quickly converted into cash are
sufficient to cover current liabilities.
If quick ratio is higher, company may keep too much cash on hand or have a problem
collecting its accounts receivable. Higher quick ratio is needed when the company has difficulty
borrowing on short-term notes. A quick ratio higher than 1:1 indicates that the business can meet
its current financial obligations with the available quick funds on hand.
A quick ratio lowers than 1:1, may indicate that the company relies too much on
inventory or other assets to pay its short-term liabilities.Many lenders are interested in this ratio
because it does not include inventory, which may or may not be easily converted into cash.
In EXCEL CROP CARE LTD. quick ratio is greater than standard one. It shows that the
company has much cash on hand as its ratio is some of higher than standard one.

B) CURRENT ASSETS MOVEMENT RATIOS
Funds are invested in various assets in business to make sales and earn profits. The
efficiency with which assets are managed directly affects the volume of sales. The better the
management of assets, large is the amount of sales and profits. Current assets movement ratios
measure the efficiency with which a firm manages its resources. These ratios are called turnover
ratios because they indicate the speed with which assets are converted or turned over into sales.
Depending upon the purpose, a number of turnover ratios can be calculated. These are
1. Inventory Turnover Ratio
2. Debtors Turnover Ratio
3. Creditors Turnover Ratio
4. Working Capital Turnover Ratio
The current ratio and quick ratio give misleading results if current assets include high
amount of debtors due to slow credit collections and moreover if the assets include high amount
of slow moving inventories. As both the ratios ignore the movement of current assets, it is
important to calculate the turnover ratio.

59
1. I NVENTORY TURNOVER OR STOCK TURNOVER RATI O:
Every firm has to maintain a certain amount of inventory of finished goods so as to meet the
requirements of the business. But the level of inventory should neither be too high nor too low.
Because it is harmful to hold more inventory as some amount of capital is blocked in it and
some cost is involved in it. It will therefore be advisable to dispose the inventory as soon as
possible.
INVENTORY TURNOVER RATIO = Cost of Goods Sold
Average Inventory
Inventory turnover ratio measures the speed with which the stock is converted into sales.
Usually a high inventory ratio indicates an efficient management of inventory because more
frequently the stocks are sold; the lesser amount of money is required to finance the
inventory,whereas low inventory turnover ratio indicates the inefficient management of
inventory. A low inventory turnover implies over investment in inventories, dull business, poor
quality of goods, stock accumulations and slow moving goods and low profits as compared to
total investment.
AVERAGE STOCK = Opening Stock + Closing Stock
2
Year 2009 2010 2011
Cogs 382.82 289.04 320.45
Average Inventory 35.80 40.59 44.68
Inventory Turnover Ratio 10.69 Times 7.12 Times 7.17 Times

10.69
7.12 7.17
0
2
4
6
8
10
12
2009 2010 2011
T
i
m
e
s

Year
Inventory Turnover Ratio

60
Interpretation:
This ratio shows how rapidly the inventory is turning into receivable through sales. In
2009 the company has high inventory turnover ratio but in 2010 and 2011 it has less. This shows
that the companys inventory management technique is less efficient as compare to last year. In
2010, because of companys main product ENDOSALFAN has been banned. So the quick ratio
comes down to 1.50 times in 2010.
2. Debtors Turnover Ratio:
A concern may sell its goods on cash as well as on credit to increase its sales and a
liberal credit policy may result in tying up substantial funds of a firm in the form of trade
debtors. Trade debtors are expected to be converted into cash within a short period and are
included in current assets. So liquidity position of a concern also depends upon the quality of
trade debtors. Two types of ratio can be calculated to evaluate the quality of debtors.
a) Debtors Turnover Ratio
b) Average Collection Period

(A) DEBTORS TURNOVER RATIO:
Debtors Turnover Ratio = Total Sales (Credit)
Average Debtors
Debtors velocity indicates the number of times the debtors are turned over during a year.
Generally higher the value of debtors turnover ratio the more efficient is the management of
debtors/sales or more liquid are the debtors. Whereas a low debtors turnover ratio indicates poor
management of debtors/sales and less liquid debtors. This ratio should be compared with ratios
of other firms doing the same business and a trend may be found to make a better interpretation
of the ratio.
Average Debtors = Opening Debtor+Closing Debtor
2


61
5.11
5.90
4.28
4.76
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
2008 2009 2010 2011
T
i
m
e
s

Year
Debtors Turnover Ratio

YEAR 2008 2009 2010 2011
Average debtors 101.645 122.675 148.26 157.29
Sales 519.83 724.04 634.41 749.02
Debtors Turnover Ratio 5.11 times 5.90 times 4.28 times 4.76 times



Interpretation:
This ratio indicates the speed with which debtors are being converted or turnover into
sales. The higher the values or turnover into sales,the higher the values of debtors turnover, the
more efficient is the management of credit. In EXCEL CROP CARE LTD. the debtor turnover
ratio is increased from 5.11 in 2008 to 5.9 in 2009. But in2010, it decreases so much and
reached at 4.28 which shows bad for company. In 2010, there is less debtors turnover. This
shows that company is not utilizing its debtors efficiency in 2010. But in 2011, again it
increased to 4.76


62
(B) AVERAGE COLLECTION PERIOD:
Average Collection Period = No. of Working Days
Debtors Turnover Ratio
The average collection period ratio represents the average number of days for which a
firm has to wait before its receivables are converted into cash. It measures the quality of debtors.
Generally, shorter the average collection period the better is the quality of debtors as a short
collection period implies quick payment by debtors and vice-versa.

Average Collection Period = 365 (Net Working Days)
Debtors Turnover Ratio

YEAR 2008 2009 2010 2011
Days 365 365 365 365
Debtors turnover ratio 5.11 times 5.90 times 4.28 times 4.76 times
Average Collection Period
71.43
Days
61.86
Days
85.28
Days
76.68
Days

63
Interpretation:
The average collection period measures the quality of debtors and it helps in analyzing
the efficiency of collection efforts. It also helps to analysis the credit policy adopted by
company. In the firm average collection period was least in 2009 as debtor turnover ratio is
increases average collection period decrease.And in 2010 the debtor turnover ratio decreases
average collection period increases and numbers of days are increaseds.
3. CREDI TOR TURNOVER RATI O:
Creditors are the businesses or people who provide goods and services in credit terms.
That is, they allow us time to pay rather than paying in cash.
There are good reasons why we allow people to pay on credit even though literally it doesn't
make sense! If we allow people time to pay their bills, they are more likely to buy from your
business than from another business that doesn't give credit. The length of credit period allowed
is also a factor that can help a potential customer deciding whether to buy from your business or
not: the longer the better, of course.
In spite of what we have just said, creditors will need to optimize their credit control
policies in exactly the same way that we did when we were assessing our debtors' turnover ratio
- after all, if you are my debtor I am your creditor!
71
62
85
77
0
10
20
30
40
50
60
70
80
90
2008 2009 2010 2011
D
a
y
s

Year
Average Collection Period

64
The formula for this ratio is:
CREDITORS TURNOVER RATIO = Cost Of Sales
Creditors

YEAR 2008 2009 2010 2011
Cost Of Sales 379.94 545.28 488.58 320.45
Creditors 82.12 85.09 100.77 104.21
Creditors Turnover Ratio
4.63 times 6.41 times 4.85 times 3.07 times


Interpretation:
It signifies the credit period enjoyed by the firm in paying creditors. Accounts payable
include both sundry creditors and bills payable. Higher the payable period lower the working
capital requirement, but on the other hand it may affect the prestige of the firm so the company
has to frame creditors policy in such manner. In EXCEL CROP CARE LTD. in years 2008 and
2009 the credit policy was good as it decreased but in 2009 ratio increases which might affect
the company prestige. In 2011 they have again good credit policy as the ratio is 3.07 times.
4.63
6.41
4.85
3.07
0
1
2
3
4
5
6
7
2008 2009 2010 2011
T
i
m
e
s

Year
Creditors Turnover Ratio

65
2.43
2.8
2.36
1.53
0
0.5
1
1.5
2
2.5
3
2008 2009 2010 2011
T
i
m
e
s

Year
Working Capital Turnover Ratio
4. Working Capital Turnover Ratio:
Working capital turnover ratio indicates the velocity of utilization of net working
capital. This ratio indicates the number of times the working capital is turned over in the course
of the year. This ratio measures the efficiency with which the working capital is used by the
firm. A higher ratio indicates efficient utilization of working capital and a low ratio indicates
otherwise. But a very high working capital turnover is not a good situation for any firm.
Working Capital Turnover Ratio = Cost of Sales
Net Working Capital


Interpretation:
This ratio indicates low much net working capital requires for sales. In 2010, the
reciprocal of this ratio (1/2.36 = 0.42) shows that for sales of Rs. 1 the company requires 42
paisa as working capital. Thus this ratio is helpful to forecast the working capital requirement on
the basis of sales.
YEAR 2008 2009 2010 2011
Cogs
354.69 508.42 475.6 320.45
Net working capital 145.78 181.66 201.6 209.09
W.C. Turnover Ratio 2.43Times 2.80 Times 2.36 Times 1.53 Times

66

FINDINGS
Working capital management is important aspects of financial management. The study of
working capital of Excel Crop Care Ltd. has reviled that the liquidity ratio was as per the
standard industrial practices. The study has been conducted on working capital ratios analysis,
ABC analysis and operating and cash cycle analysis which helped the company to manage its
working capital efficiency and affectively.
Current assets are more than current liabilities indicates that company use long term
funds for short term requirements, where long term funds are most costly than short term
Company has more inventories in total current assets.
Working capital turnover ratio leads towards profitability. Working capital turnover ratio
has a positive correlation (0.42). It means that changes in working capital turnover
directly effect on profitability of the business. Thus, working capital turnover is very
important for the business.
Current ratio of the company in last year nearer to the ideal current ratio. It indicates
companys good liquidity position but in 2009 and 2010, current ratio is higher than
standard one, it shows that the company has unnecessary investment in last two year in
current assets.
Quick ratio of EXCEL CROP CARE LTD. above the ideal ratio. Here company required
to reduce some investment in current assets so the cost of fund reduces and profitability
increase.
EXCEL CROP CARE LTD. working capital shows the good liquidity position. Positive
working capital indicates that company has the ability of the payments of short terms liabilities.
Working capital of EXCEL CROP CARE LTD. not indicates any trend for particular period of
time. All over working capital management of the company is average.


67
RECOMMENDATIONS
1. They should use short term resources of fund for requirement of its working capital,
along with long term resources.
2. They should maintain proper inventory levels to avoid unnecessary blockage of funds in
inventory.
3. They should change policy according to current market situation


68
CONCLUSION
The mission of Excel is providing best quality to customers. It is financially very sound
organization. The performance of the Excel has been good. Due to constant work on the quality,
better concentration on the material usage and proper prices, the Excel could improve maximum
its performance. They are some of weak at maintenance of inventory stock as they have more
current assets (cash) block in it. The reason behind it is seasonal demand of product.Excel is
continuously trying to maximize the wealth of share holders.
Company manage its working capital carefully but in last year because of problem
related to endosulfan the main product of the company in Bhavnagar unit, they are lacking in
management of working capital said by finance manager Mr.Mukharjee
The company required more days in operating cycle and cash cycle because it is crop care
product manufacturing organization and this crop care product endosulfan used in a particular
season only. To meet with large demand of product they are producing whole year and selling it
on a particular season, so there is large operating cycle. They have large number of different
types of inventory and they do ABC analysis efficiently. Out of all product of this company,
large production is ofendosulfan done by the company, and 70% of total production of
endosulfan is exported.

69
BIBLIOGRAPHY
BOOK REFERENCES
M Y Khan P K Jain (2008); Financial Management, Theory and Problems, 2
nd
edition,
published by Tata McGraw-Hill
G Sudarsana Reddy(2009); financial management , principle and practices, 2
nd
edition,
published by Himalaya publishing house
WEB SITES
www.excelcropcareindia.com
http://www.moneycontrol.com/india/stockpricequote/pesticidesagrochemicals/excelcrop
care/ECC03
http://www.indiainfoline.com/Markets/Company/Fundamentals/Management-
Discussions/Excel-Crop-Care-Ltd/532511
http://books.google.com/books/about/Encyclopaedia_Of_Working_Capital_Managem.ht
ml?id=l1vVAAAACAAJ

ANNUAL REPORTS:
Annual Reports of Excelcrop care Ltd of last 3 years